A Care Ratings report suggests, revenues of the Indian cotton yarn industry are likely to decline and margins will remain moderate due to weak demand and shutting down of manufacturing units. Smaller companies with high debt levels, limited access to bank funding and limited liquidity buffer are expected to be impacted the most compared with their larger counterparts.
The Indian cotton spinning industry, which was already facing multiple headwinds such as low demand, unfavorable duty structure and fluctuating cotton fiber prices, is now confronted with yet another challenge in the form of COVID-19 pandemic. Facing lean demand since 2014-15, with intermittent spells of good periods, the Indian cotton yarn industry was expecting a change of fortune in 2019-20.
The estimate of bumper crops in the cotton season of 2019-20 was expected to bring respite to the sector.
The benefit, which was anticipated to come from lower fiber prices, is now expected to be more than offset by the fresh set of challenges brought in by COVID-19 outbreak.
